Investment firm Osprey Funds has announced its intention to convert its Osprey Bitcoin Trust (OBTC) into a Bitcoin ETF after an acquisition deal with Bitwise Asset Management fell apart.
OBTC Conversion Prospects
OBTC, previously considered a competitor to the Grayscale Bitcoin Trust, which converted its fund into a spot Bitcoin ETF in January 2024, is now also aiming for this conversion. Currently, OBTC tracks Bitcoin prices without holding the asset and manages assets worth $181 million.
Legal Battle and Strategic Pivot
In January 2023, Osprey filed a lawsuit against Grayscale, accusing it of misleading marketing practices that allegedly gave Grayscale an unfair advantage in the Bitcoin over-the-counter (OTC) trust market. This case remains unresolved. In March 2024, Osprey acknowledged challenges with OBTC units trading at a discount to Bitcoin’s value, sparking discussions on a potential sale or liquidation of the trust.
Future of Bitcoin ETFs and Osprey Funds
The Bitcoin ETF market is rapidly growing, with 32 Bitcoin ETFs currently operating in the U.S., 11 of which are spot Bitcoin ETFs. Osprey's move to convert OBTC into an ETF underscores its determination to remain competitive in a market dominated by players like Grayscale.
The conversion of OBTC into a Bitcoin ETF signifies Osprey Funds' serious intentions to remain afloat in the competitive exchange-traded fund markets.
